Connecticut Estate Planning Attorneys Blog
If this happened to you…
“Honey, I’m stuck on 91 and Triple A says the car needs a new alternator. Don’t we have an extended warranty?”
… Which one of the following scenarios would best describe you?
a) Your spouse quickly locates the paperwork and heads over to pick you up. On the way home you stop by the dealer and drop off the warranty. The alternator is covered.
b) Your spouse picks you up and the two of you ransack the house looking for the warranty. After several hours, you find it in the bottom of a closet in a recycle bag full of unsorted mail.
c) Your spouse picks you up and the two of you ransack the house looking for the warranty. It’s nowhere to be found. Unfortunately you bought the car in another state and the dealer went out of business. Looks like you’ll have to pay for the alternator.
If you answered b or c, you’re not alone. According to Consumer Reports, only 40 percent of Americans said they would be able to find a document at a moment’s notice. Here are some tips to help you get on track and stay on track.
Consumer Reports recommends that you divide all of your records into four categories:
1) Papers you need to keep for a calendar year or less
- Bank records – reconcile receipts monthly; keep statements needed to prove tax deductions with tax records; shred the rest (If you’re planning to apply for Medicaid, you’ll need five years of statements, which your financial institutions will provide at no charge.)
- Credit-card bills – reconcile receipts monthly; keep statements needed to prove tax deductions with tax records; shred the rest
- Current-year tax records – start the year with a file for tax-related documents and save yourself the headache of tracking them down at tax time
- Insurance policies – when you get your new policies each year, shred the old ones
- Investment statements – keep the latest ones and shred the rest; save the annual statements until you sell the investments
- Pay stubs – keep a year’s worth and reconcile them with your W-2, then shred
- Receipts – shred once you’ve reconciled them to statements; keep if they apply to items in Category 2 below, or if you need them for business deductions.
2) Papers that can be destroyed when you no longer own the items they cover
- Household furnishings paperwork
- Investment purchase confirmations
- Loan documents
- Savings bonds
- Vehicle records
3) Tax records
- Save for seven years – see a detailed explanation in our article, Store or Shred in the Feb/March issue of our newsletter Smart Planner.
4) Papers to keep indefinitely
- Defined benefit plan documents – keep these for both current and former employers.
- Estate planning documents – wills, trusts, power of attorney, advance directives.
- Life insurance policies – except term, which you should keep until the term is over, then shred.
- Safe deposit box inventory – location, keys, a list of what’s in it.
Here are some of the important documents you should keep in a safe deposit box:
- Birth and death certificates
- Estate planning documents
- Life insurance policies
- Loan documents until you no longer own the item
- Marriage licenses and divorce decrees
- Social Security card(s)
- Vehicle title(s) for vehicles you currently own
With a good plan that’s up-to-date, you’ll be well prepared to manage life’s unexpected circumstances without the added stress of scrambling to find essential documents at the worst possible time.
Source: Consumer Reports – Conquer the paper piles: What documents to keep, what you can toss, and when
